Tag Archives: moscovici

Italy’s Mario Draghi, the president of the European Central Bank, joined Stanley Fischer, the vice chair of the Federal Reserve, in an hour-long program at the Brookings Institution earlier today.

Draghi addressed at length both the ECB’s steps to confront deflation and the need for EU countries to enact bolder economic reforms in his remarks and in his discussion with Fischer, the former president of Israel’s central bank and a former professor at the University of Chicago who once taught Draghi.

Deflation as Europe’s chief economic threat

Draghi stressed that he understands the biggest risk to European Union’s economic recovery is deflation. He noted that the ECB is transitioning from a more passive approach to a much more active ‘QE-style’ approach to the bank’s balance sheet — in part by moving last month to purchase private-sector bonds and asset-backed securities. Even if Draghi’s efforts still fall short of the kind of quantitative easing (e.g., outright asset purchases) that the Federal Reserve introduced to US monetary policy five years ago, Draghi committed himself to lifting the eurozone’s inflation from ‘its excessively low level’:

We will do exactly that.

It’s not exactly ‘whatever it takes,’ but it’s a sign that Draghi realizes the dangers that deflation presents, with the eurozone inflation rate falling to just 0.3%, the lowest level since the height of the eurozone’s existential sovereign debt crisis:

On Wednesday, the incoming president of the European Commission, Jean-Claude Juncker (pictured above), released full details on the proposed commissioners within his Commission, which will serve as the chief executive and administrative body of the European Union between 2014 and 2019.

The most important feature of the proposed Juncker Commission is that he’s introduced the greatest amount of hierarchy in an institution that used to be flat. It’s not a secret that some portfolios have always been more desirable than others, especially as the Commission has expanded to include all 28 member-states. But Juncker has introduced a first vice president and five vice presidents, who will also serve alongside Italy’s foreign minister Federica Mogherini, who was appointed two weeks ago to serve as Commission vice president and high representative for foreign affairs and security policy.

The delegation of so much power to five ‘super-commissioners’ with roving, supervisory briefs indicates that Juncker intends to be a much less hands-on Commission president that his predecessor, José Manuel Barroso. But it also reflects a Commission that, including Luxembourg’s Juncker, contains five former prime ministers (Finland, Slovenia, Latvia and Estonia). It also contains four incumbents (Germany, Sweden, Bulgaria and Austria) who have served throughout the full second term of the Barroso Commission. That makes the Juncker Commission possibly the most distinguished in EU history.

Each commissioner must be approved by the European parliament and, while individual nominees have had troubles in the past, the parliament typically approves the vast majority of a Commission president’s appointments, all of whom were nominated by their respective national governments.

With nine women, it’s not as unbalanced as feared even a week or two ago, and with 14 members of the center-right European People’s Party (EPP), eight members of the center-left Party of European Socialists (PES) and five members of the Alliance of Liberals and Democrats for Europe (ALDE), it generally reflects the results of the May 25 European parliamentary elections, though some social democrats and socialists are grumbling that the left doesn’t have enough representation.

Though French president François Hollande on Monday promised a gouvernement de combat in his cabinet reshuffle, it looks like the government he’s chosen might wind up spending more time combatting one another that the myriad economic challenges that France faces.

Just 48 hours after naming interior minister Manuel Valls, the hard-charging, Roma-busting strongman of the Parti socialiste (PS, Socialist Party) as France’s new prime minister, Hollande announced the rest of his cabinet reshuffle today.

Though the return of Ségolène Royal, Hollande’s partner of three decades and the 2007 Socialist Party’s presidential candidate, is sure to top most headlines, the heart of the cabinet reshuffle are Hollande’s schizophrenic choices for finance minister, Michel Sapin (pictured above), and economy minister, Arnaud Montebourg.

At first glance, Hollande’s new slimmed-down cabinet (16 ministers instead of 20) seems like a kind of ‘team of rivals,’ given that Valls, Montebourg and Royal all campaigned for the Socialist Party’s 2012 presidential nomination — the only major rival not to hold a post in the new government is Martine Aubry, a longtime champion of the party’s left wing and the former minister who introduced France’s 35-hour workweek (a policy that Valls stridently opposes).

In choosing Manuel Valls, the popular interior minister, as France’s new prime minister, French president François Hollande is taking a risk that elevating the most popular minister in his government will attract support from among the wider French electorate without alienating the leftist core of the Parti socialiste (PS, Socialist Party).

Pivoting off the poor Socialist showing in last weekend’s nationwide municipal elections, Hollande’s cabinet reshuffle is a sign that he understands he has largely lost the trust of the French electorate in less than two years. Other ministers, including finance minister Pierre Moscovici, could also lose their jobs in a reshuffle to be announced later this week.

Prime minister Jean-Marc Ayrault resigned today after just 22 months on the job. LIke Hollande, Ayrault has become increasingly unpopular as the government has pursued aggressive measures to stabilize France’s budget, including tax increases and adjustments and cuts to France’s pension system — all in the face of a sluggish economy, a 10.8% unemployment rate and a greater crisis in confidence over France’s role within the European Union and the world.

In a short statement announcing Valls, Hollande pledged to continue pursing a payroll tax cut and additional pension and labor law reforms as part of a recent attempt to win support from the French business community, a series of reforms that Valls has enthusiastically promoted throughout his career. He also promised that Valls would lead a ‘combative government,’ which sounds like somewhat of an understatement in translation from a gouvernement de combat.

In light of Ayrault’s highly collaborative style, and Valls’s much more aggressive style, even the original French seems like an understatement.

But while the latest IFOP poll from mid-March gave Hollande a 23% approval rating (his highest, in fact, since last October) and Ayrault a 26% approval rating, Valls has an approval rating of 63%. That goes a long way in explaining why Hollande is replacing Ayrault with Valls today.

It’s not a choice without risks. Valls, a centrist with controversial views about the Roma and immigration, could divide the French left. If Hollande’s unpopularity continues, he could taint one of the few remaining popular figures within the Socialist Party. If Valls succeeds, he could supplant Hollande as the more attractive presidential candidate in 2017.

With the French press salivating over French president François Hollande’s surprisingly sordid love life, Hollande tried to refocus his administration’s agenda last week at a press conference to announce a planned cut in France’s payroll taxes and other measures to boost France’s competitiveness. It’s a bid to win back some control over his unravelling public image. Hollande suffers from massively low approval ratings — just 22% of French voters support Hollande (somewhat of an improvement over polls in November that gave him just 15% approval). There’s even talk that his administration could augur the collapse of France’s Fifth Republic.

But Hollande’s policy revamp has been lost in the furor over Hollande’s alleged dalliance with actress Julie Gayet. Tabloids showed photos of the French president sneaking off to meet Gayet on his scooter (pictured above), and the news seems to have sent his current partner, Valérie Trierweiler, to a Paris hospital for over a week. Elected on the premise that he would bring decorum and normalité to the Élysée after the ‘bling-bling’ presidency of Nicolas Sarkozy, Hollande’s love life began overshadowing his presidency within days of his inauguration.

Trierweiler tweeted in support of Olivier Falroni, a dissident parliamentary candidate in June 2012, who was running against Ségolène Royal, Hollande’s former partner and the 2007 presidential candidate of the Parti socialiste (PS, Socialist Party). Royal lost that race, despite Hollande’s support. A reporter for Paris Match, Trierweiler fulfills the role of France’s first lady, complete with budget and staff, notwithstanding that she and Hollande never married. Hollande and Royal also never officially married during their nearly 30-year relationship, which produced four children.

Trierweiler left the hospital after more than a week on Saturday afternoon, but the discord between France’s first couple continues to dominate headlines, with LeJournal de Dimanchereporting that presidential advisers are calling the relationship ‘finished.’ So much for Mr. Normality. Though Sarkozy and his two predecessors, Jacques Chirac and François Mitterand, were both known for active love lives, the nature of media has changed since the French press kept Mitterand’s longtime mistress a secret from the public in the 1980s.

At a policy level, none of Hollande’s domestic troubles should matter. But they come at exactly the wrong time, overshadowing Hollande’s push to make France’s economy more competitive. At the center of Hollande’s proposal is a €30 billion payroll tax cut for French businesses, continue pushing forward with plans for €15 billion in budget cuts this year, with €50 billion more to follow over the next three years. Though Hollande hopes that will make France’s businesses more willing to hire French workers, it seems unlikely to erase the mistrust Hollande has engendered by pushing a top income tax rate of 75% on incomes over €1 million, a troubled policy that seems set to take effect after facing legal problems in France’s top constitutional court. Hollande and his leftist parliamentary majority pushed through a labor market reform in January 2013, but it was a relatively minor first step that merely streamlined the process for conducting layoffs.

Most indications are that the next Euro Group head will be a relative newcomer to the group of eurozone finance ministers — Dutch minister Jeroen Dijsselbloem, who declared his formal candidacy for the job today.

As I noted at the beginning of the year in my piece on 13 up-and-coming politicians to watch in 2013, the current head of the Euro Group since 2005, Jean-Claude Juncker, also prime minister of tiny Luxembourg since 1995 and the Luxembourgian finance minister from 1989 to 2009, is stepping down from the role.

Dijsselbloem belongs to the anti-austerity social democratic Partij van de Arbeid (PvdA, Labour Party) — that has joined a coalition that’s headed by the decidedly more budget-obsessed Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) and prime minister Mark Rutte.

The Euro Group came into being in the late 1990s in advance of the introduction of the single currency as an informal group. In 2005, Juncker became the group’s first president amid a push to formalize the group’s role in 2009 though a protocol to the Treaty of Lisbon:

The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.

The Euro Group typically meets a day before the Economic and Financial Affairs Council of the Council (Ecofin) of the European Union — Ecofin is comprised of the wider group of all 26 EU member state finance/economics ministers. Accordingly, the Euro Group typically dominates economic policymaking at the Council level. At the Council, policies related to fiscal matters must be adopted unanimously, though other policies can be adopted by the EU’s qualified majority voting mechanism (i.e., essentially a supermajority formula that requires both a majority of the 27 member states and a majority of the EU population).

The Euro Group president is appointed for a term of 2.5 years, by majority vote of the Euro Group, and the next president could be appointed as early as Monday, though French finance minister Pierre Moscovici has called for a more formal and transparent process of selecting the next president. Moscovici has also called on Dijsselbloem to outline his views on the future direction of the Euro Group, and Dijsselbloem is set to discuss goals at Monday’s meeting, though Juncker has been dropping all sorts of hints that Dijsselbloem’s selection is all but assured.

Dijsselbloem has been a member of the Tweede Kamer (the lower house of the Dutch parliament) since 2000, after spending four years as an assistant at the ministry of agriculture, nature management and fisheries.

In parliament, Dijsselbloem has been a moderating voice on highly charged issues like the role of Muslims in Dutch society. In 2007, he spearheaded a commission on educational reform. Earlier in 2012, when former Amsterdam mayor Job Cohen resigned as Labour leader, Dijsselbloem was chosen to serve as the party’s interim leader until Samsom was elected as the permanent Labour leader, and he was the fifth candidate on Labour’s list in the 2012 elections.

As early as the 2003 election, Dijsselbloem was seen as a Samsom confidante — they campaigned together in that year as the ‘rode ingenieurs‘ — the ‘Red Engineers’ — due to their red overalls and scientific backgrounds, Samsom in nuclear energy and Dijsselbloem in agricultural economics.

Despite just two months on the job as a pro-growth minister in a government that will seek to reduce the Dutch budget to within 3% of GDP in 2013, Dijsselbloem literally personifies the current fiscal debate in Europe. It helps that the Netherlands was one of the original six countries that formed the predecessor to the European Union and that it retains one of Europe’s last remaining ‘AAA’ credit ratings.

On one side, as personified by Moscovici and French president François Hollande of the center-left Parti socialiste, only aggressive government policies to boost aggregate demand can reduce unemployment and jumpstart Europe’s economic engine. Although even Hollande admits the need to bring France’s budget in line with the European Union standard, generally, of within 3% of GDP, Hollande’s government has preferred to implement tax increases rather than cut spending too deeply.

On the other side, as personified by German finance minister Wolfgang Schäuble and German chancellor Angela Merkel of the center-right Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Union), the key to prosperity — even in the face of recession — is to cut spending and narrow the budget deficit, thereby bringing more investment and business confidence by shoring up public finances. Continue reading Who is Jeroen Dijsselbloem?→

Laurent Fabius’s appointment as foreign minister was expected, even though he campaigned against the European Union constitution in 2005. Fabius (above, center) is a grandee of the Parti socialiste, having served as prime minister from 1984 to 1986 during the Mitterand administration, and later as finance minister from 2000 to 2002 under former prime minister Lionel Jospin.

Martine Aubry, a leftist firebrand who had been seen as a contender for prime minister and the runner-up to Hollande in the presidential nomination race, will not take part at all in the cabinet, which is mildly surprising. She had been allegedly offered and rejected a “super ministry” role from Hollande.

Michel Sapin, another chief economic adviser to Hollande, had been tipped for finance minister, but will instead serve as labor minister. The fiscally conservative Sapin served as finance minister from 1992 to 1993 during the Mitterand administration and as the minister of Civil Servants and Sate Reforms from 2000 to 2002.

As expected, Manuel Valls, an up-and-coming MP, who served as the Hollande campaign’s communications chief and who comes from the more pro-market wing of the PS, was named interior minister. Nicolas Sarkozy used the interior ministry as a stepping stone in the mid 2000s to launch his successful 2007 campaign.

Former 2002 presidential candidate and the South America-born Christiane Taubira (above, bottom), who is currently an MP for French Guiana, will serve as minister of justice as the highest-ranking woman in a cabinet that will achieve gender parity. Taubira is not a member of the PS, but rather the founder of the French Guiana-based Walwari party and a bit of a “free electron” in French politics.

Nicole Bricq, a member of France’s Senate and another ally of Strauss-Kahn, will serve as minister of the environment.

Le Monde has a full infographic of the new cabinet here and full bios here.

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